Sunday, October 14, 2012

In a Stunning Turn of Events, Bill Doesn't Understand How Stuff Works

James Harden will be a restricted free agent next summer.  The Thunder have said that they don't want to give him the max deal he could most certainly obtain on the open market, because that put them in luxury tax territory.  It's possible that this is just posturing on their part and that they fully intend to pay Harden max money when the times comes, or entice him into taking a team-friendly extension before he can hit the RFA market.  It's also possible that they simply do not want to pay the tax under any circumstances and that they'd let him walk after this season.  After Bill lays out the basics of the situation, explains why he thinks Harden is such an important player for OKC, and aggressively shoehorns in a 600 word aside about the relationship between Sam Jone and Bill Russell, he puts on his "I know nothing about this subject but I'm going to use big words and hope no one notices what a fool I am" hat and starts to talk sports business. And that's when I start to want to throw my laptop at my TV.

If Harden leaves eight figures on the table to re-sign with the Thunder, he's a loyal sap. If he does it without securing a no-trade clause — especially on the heels of the Celtics rope-a-doping Rajon Rondo into a discount $55 million extension (well below his market value), then trying to trade him for Chris Paul one year later — his agent should be disbarred.

But even then ... why take anything less? Why should James Harden care if Oklahoma City loses money?

If he likes playing in OKC with Durant and Westbrook? It's funny, the Jones/Russell aside I mentioned was tangentially related to the subject at hand; basically, according to Russell, Jones never wanted to be the leading man, preferring to play a supplementary rule, which is why he never pushed himself as much as Russell did. And Harden is the same way; he came right out and told Sam Presti to draft him because he wanted to play third fiddle, not be expected to become his new team's leading guy. You might think Bill would be able to put his own pieces together and realize that Harden might take sub-max money to stay in OKC rather than take max money to go to a team that expects him to take 20 shots a night, but if you thought that, you would be counting out the always powerful presence of cognitive dissonance.

Here's a better question: Why should Harden even believe them?

Because the team releases audited financials to the league, which in turn makes certain data from those financials public, and it turns out that adding Harden at max money and paying both him and the tax would cause their costs to exceed their revenues?

Didn't we just come off an acrimonious lockout in which the league cried poverty for months and months, and then, as soon as the lockout ended, they had a slew of billionaires lined up to purchase their teams?

Yes. Because sports teams are a great investment in the long run, skyrocketing in value during the past couple of decades and a pretty safe bet to continue to do so in the future. But that value increase isn't realized until one sells the team, and in the meantime, many of them operate at a loss on a year-by-year basis. Some owners are cool with that, in some cases because they can net their team-related losses against profits made in other ventures and cut their tax bills. Others are not, in some cases because they don't have other significant business ventures and in some cases simply because they hate the idea of losing millions of dollars every year, even if they expect to recoup those millions and then some whenever they sell. I don't know which of those describe's OKC's ownership (or if they even actually feel that way; there's a good chance they're just bluffing to try to knock down Harden's price), nor do I care. This is not a difficult concept to understand. But watch out, here comes BIG BRAIN BILL, ready to point out that HEY WAIT A MINUTE SPORTS TEAMS ARE WORTH LOTZ OF DOLLARZ SO WHY SHOULD WE EVER BELIEVE AN OWNER.

Quick aside about OKC's ownership--if I were writing for Grantland, I'd footnote it, but then again if I were writing for Grantland there's also a good chance I'd be a talentless navel-gazing hack, so I'm cool with things as they are. Anyways, hey Seattle: (/Larry B makes "smallest violin" finger motions) GET THE FUCK OVER IT. Yes, sports owners are horrible people. Yes, Howard Schultz and Clay Bennett are among that group of horrible people. No, you are not the only city to ever lose a beloved team. Climb down off your crosses, dry your fucking tears, and enjoy your NFL and MLB teams. At least you're not Quebec City or Hartford (or Sacramento in 2014 or so). Jesus Christ on a pogo stick. Enough with the Sonics pity party. If was fine for the first year or two. Now it's time to shut your cakeholes.

We're in the middle of an NBA renaissance that mirrors what happened from 1984 to 1993: marketable (and likable) stars, genuine rivalries, contenders in big markets, a transcendent superstar leading the way ... really, we're about to run back the most successful 10-year stretch in the history of the league.

Yes, and yet, the luxury tax is still a real thing that costs real money if a team's payroll exceeds a certain threshold. I'm not saying every team should avoid paying it in all circumstances. I'm not saying I think the Thunder should definitely let Harden go. I'm just saying, it's incredibly dumb and simple-minded for some clod like Bill to say DURRRR HARDEN IZ GOOD SO DEY SHOULD PAY WUTEVER IT KOSTS TO KEEP HIM. Look, here's one of Bill's own footnotes from elsewhere in this very article:

3. That number jumps to $38 million the following season. And remember, the luxury-tax penalties become more punitive a year from now. For the 2012-13 season, the NBA's cap is $58.3 and the luxury tax threshold is $70.3 million — numbers that could curve up if the league continues to thrive. The following summer, steeper tax penalties will mean that any tax team pays $1.50 for every dollar over the tax — and also, they'd be more restricted with their free agent exceptions. "repeater" tax penalties that make it hairier for the repeat offenders. Ken Berger and Zach Lowe explained the gory details last summer.


So listening to Oklahoma City's brain trust whine about "the bottom line" like they're some mom-and-pop hardware store in East Shartsquatch ... I mean, it just doesn't add up, especially when you factor in their profits from this season and the previous four.

Look, I don't want to sound like I'm some kind of shill for greedy sports owners here. I hate them and I hate the Thunder and I hate their fanbase and I hate all of you who are reading. But the fact that franchises are businesses can't be swept under the rug here. DAW WHATEVER DEY IS MAKIN MUNEY NO MATTER WUT SO ALL DER ARGUMENTS IS AUTO-WRONG isn't going to cut it.

Clay Bennett's group paid $350 million for the Sonics. If you don't think they could sell a franchise that features Harden, Westbrook and Kevin Effing Durant for $500 million in about 2.3 seconds, you're eating bath salts again. Billionaires overpay for sports franchises all the time. It's the ultimate ego purchase. It's like buying a 700-foot yacht. You get to walk around with your chest puffed out, give humblebrag nterviews, sit courtside and swing your genitals like a lasso, basically.

But if you're losing money every year you hold the franchise, and don't have a way to balance out those losses, at some point your only choice will be to sell. And if you really like owning the team, you don't want to sell. Therefore: you might not want to run your team at a loss.

You know why we'll never find out if some billionaire would severely overpay for a lovable contender starring Kevin Durant that's going to win 60 games and make the Conference Finals AT WORST every year for the next decade?

Any team that lets Westbrook take 25 shots a game is always at risk of being upset in a 7 game series. And I hope it happens to OKC this season. And next season. And the one after that.  Forever.  Grrrrrrr

Because there's a better chance of Clay Bennett buying a summer house in Seattle then selling the Thunder right now.

So again, why should he happily plunge payroll deep into the luxury tax zone to pay his team's third best player?

Maybe you didn't notice, but the Thunder became Young America's Team last season. Attend one of their road games this season and glance around at the crowd. You know what you'll see? Dozens and dozens of kids wearing Thunder jerseys. You know why?

Little kids are front-runners!

He only mentioned this 1,000 times during the NHL playoffs last spring. It's just as unclever an observation now as it was then.

It's the same reason so many people in my age group became Cowboys, Steelers and Yankee fans. It's the same reason I took my son to his first Clippers game last spring, and by halftime, he was demanding a GRIFFIN jersey. If you were a little front-runner and your hometown team sucked, who'd grab your fancy? Probably Durant and Westbrook and that dude with the crazy beard, right?

Probably the Lakers or Heat, but yeah, I'll allow that the Thunder are climbing that list. Doesn't put money in the pockets of the Thunder, though.

In 2012, you can follow any NBA team you want, whenever you want, however you want. You can watch them on your laptop, your iPad, your iPhone or your giant TV. Really, it doesn't matter where the Thunder play — they could play every home game in Pyongyang and have the same relevance.

Money from League Pass subscriptions is split evenly among all teams. So is most money derived from sales of apparel.

Throw in revenue sharing, the league's savvy digital presence, the real potential of staggering fees for the league's next television deal (up in 2016), and the Thunder's success with season ticket sales (they're fifth in the league this season) and I'm pretty sure the Thunder's owners won't be panhandling on the streets of Oklahoma City after paying James Harden.

/Larry B hangs head in exasperation

And since we're here, shouldn't we mention how well the NBA is doing right now? How does that NOT play into this Harden dilemma?

It does, you horse's ass, it's just not the end of the discussion. Holy fucking shitballs.

Unlike the NFL, the NBA doesn't have concussions hanging over it like a black cloud. Unlike baseball, the NBA actually appeals to people under 25. Unlike hockey, the NBA is a white-collar sport that can charge white-collar prices.

Those first two statements are true (if not nearly as significant as Bill thinks they are). The third one could not be more false.

Of the four major sports, it's the only one that will unquestionably be sitting in a better place five years from now.

The odds that the concussion thing do anything to put football in a worse place in five years than it is now are incredibly long. Baseball will be fine too. Hockey is the sport that might be in worse shape in 2017 than it is now, and here's why they're in their second nasty lockout in the last seven years: BECAUSE A BUNCH OF ITS FRANCHISES ARE OPERATING AT A LOSS ON A YEAR-BY-YEAR BASIS AND THEY DON'T LIKE DOING THAT, EVEN IF THEY ARE ALSO INCREASING IN VALUE AS THAT HAPPENS.

So even if Oklahoma City loves to break out the small-market violin when it suits them, the facts say differently — if anything, they're one of the three or four most "global" NBA teams right now.


Forbes evaluated the Thunder to be worth just $348 million, a remarkably dumb number. If any billionaire called up Clay Bennett and offered him $348 million for the Thunder, Bennett would laugh and hang up. You aren't even getting his attention unless it's a number that starts with "5." And even then, he's probably hanging up.

We're just going in circles at this point. Let's can most of the rest of Bill the Finance Genius's ignorant fist-pounding analysis and wrap things up.

Really, it's no different than the Thunder's dilemma with Harden: On paper, he isn't actually a "max" player, just like Oklahoma City isn't actually worth $500 million. But saying what something should be worth ignores the concept of value itself: Value is determined by the market for that value, not what we believe that value should be.

Thank you, page two of an "Fundamentals of Microeconomics" textbook.

If Oklahoma City's owners don't want to pay full price for Harden, then they're really saying, We moved an NBA team from a booming city in the Pacific Northwest to a much smaller city that generates much less revenue and compromises our ability to win championships, but the fans here are so grateful that they won't hold it against us that we just tossed away a puncher's chance at a dynasty. If that's true, they're taking advantage of the goodwill of Oklahoma City's fans — really, they should be flipping their asset, cashing out and selling to an egomaniac billionaire who won't worry about losing a few bucks, just about owning one of the NBA's hottest franchises and getting shown on nationally televised games 20 to 25 times per year.

Ladies and gentlemen, your future Minnesota Timberwolves and/or Milwaukee Bucks VP of Common Sense.

1. Important note for this season: I'm giving up my four-year vow to avoid typing the word "Thunder" in an NBA column after the Sonics were hijacked from Seattle with the implicit consent of the NBA's commissioner, David Stern. It's just too much of a pain in the ass to keep the "Zombies" thing going, and more important, Chris Hansen is definitely bringing the Sonics back to Seattle. That's happening. Let's start looking forward instead of backward.

And try to forget about this horrible joke that you crammed down our throats for four years.


Adam said...

Wow, I love how Bill thinks he knows more about valuation of pro sports franchises than Forbes. His logic is DUR, DEY WIN 60 GAMES AND DEY GOT DURANT SO 800 KAJILLION DOLLARS! In reality that has not a lot to do with the team's value. The Knicks suck balls but they are probably worth 3x what the Thunder are.

Bill was always the guy saying how teams were so dumb for overpaying players and that was the cause of the lockout. Now he even admits that Harden is not worth a max contract (and I agree) but is all like OKC OWNERSHIP ARE IDIOT SCUMBAGS IF THEY DON'T GIVE HARDEN A MAX DEAL.

BR said...

Your hatred of Sonic crybabies, the Thunder, their fans and especially Big Brain Bill has enlivened my evening. Thanks.

Larry B said...

Thanks guys. Glad someone is still reading. Oops, didn't mean to say anything self-pitying there, now I sound like one of those SAVE OUR SONICS doofuses. And yet the Thunder and their fans are so obnoxious, they've got me hoping for a Lakers/Spurs WCF this year. /shudder

Anonymous said...

Did anyone else see the 30 for 30 this week about Kansas and the rules of basketball? I swear the main guy in the doc went to the Bill Simmons School of Annoyance. He actually said to Larry Brown "Is it a coincidence that you guys won the National Championship the same year as my bar mitzvah?". That is absolutely something Bill would say (if he were Jewish).

jacktotherack said...


I wanted to punch that douchebag 5 seconds into the show. I have always been fairly indifferent to Kansas basketball, I hope they never win another game just because I will know he will be miserable.